For Quarter Ended

September 30, 2000

Commission File Number

1-5415

Delaware

36-0879160

(State or Other Jurisdiction of

(I.R.S. Employer Identification No.)

incorporation of organization)

3400 North Wolf Road, Franklin Park, Illinois

60131

(Address of Principal Executive Offices)

(Zip Code)

Registrants telephone, including area code

847/455-7111

Yes

X

No

Class

Outstanding at September 30, 2000

Common Stock, No Par Value

14,060,573 shares

Number

Part I.

Financial Information

Item 1.

Financial Statements:

Condensed Balance Sheet

3

Comparative Statements of Cash Flows

3

Comparative Statements of Income

4

Notes to Condensed Financial Statements

5-6

Item 2.

Conditions and Results of Operations

6-7

Part II.

Other Information

Item 1.

Legal Proceedings.

8

Item 6.

Exhibits and Reports on Form 8-K

8

CONDENSED BALANCE SHEETS

(Dollars in thousands except per share data)

(unaudited)

Sept. 30,

Dec. 31,

Sept. 30,

ASSETS

2000

1999

1999

Cash

$2,458

$2,578

$3,292

Accounts receivable, net.

103,153

83,352

95,020

Inventories (principally on last-in, first-out basis)

188,751

169,618

179,520

Total current assets

$294,362

$255,548

$277,832

Prepaid expenses and other assets

69,457

60,716

56,591

Fixed assets, net

97,338

97,077

94,025

Total assets

$461,157

$413,341

$428,448

LIABILITIES AND STOCKHOLDERS EQUITY

Accounts payable

$105,253

$102,976

$ 84,219

Accrued liabilities

15,980

17,230

17,032

Income taxes payable

4,300

4,876

3,865

Current portion of long-term debt

3,021

3,915

3,545

Total current liabilities

$128,554

$128,997

$108,661

Long-term debt, less current portion

171,920

122,625

156,708

Deferred income taxes

17,236

16,356

16,225

Other Liabilities

2,254

3,552

3,710

Stockholders equity

141,193

141,811

143,144

Total liabilities and stockholders' equity.

$461,157

$413,341

$428,448

SHARES OUTSTANDING

14,061

14,046

14,045

BOOK VALUE PER SHARE

$10.04

$10.10

$10.19

WORKING CAPITAL

$165,808

$126,551

$169,171

WORKING CAPITAL PER SHARE

$11.79

$9.01

$12.04

DEBT TO CAPITAL

55.3%

47.2%

52.8%

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

For the Nine Months

Ended Sept. 30,

Cash flows from operating activities:

2000

1999

Net income.

$7,981

$7,243

Depreciation and amortization

7,102

7,307

Other.

 (6,844)

5,646

Cash provided from operating activities before

working capital changes

8,239

20,196

(Increase) decrease in working capital

 (39,237)

12,485

Net cash provided from (used by) operating activities

 (30,998)

32,681

Cash flows from investing activities:

Investments and acquisitions

 (4,050)

 (3,097)

)

Capital expenditures, net of sales proceeds

 (4,876)

 (5,258)

)

Net cash provided from (used by) investing activities

 (8,926)

 (8,355)

)

Cash flows from financing activities:

Long-term borrowings, net

48,401

 (15,909)

)

Dividends paid

 (8,245)

 (8,216)

)

Other.

(352)

137

Net cash provided from (used by) financing activities

39,804

 (23,988)

)

Net increase (decrease) in cash

 $(120)

$338

Cash - beginning of year

2,578

2,954

Cash - end of period

$2,458

$3,292

Supplemental Cash Disclosure

Interest

$7,406

$8,290

Income taxes

$5,079

$3,517

COMPARATIVE STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

For The Three

For The Nine

(Unaudited)

Months Ended

Months Ended

Sept. 30,

Sept. 30,

2000

1999

2000

1999

Net sales

$184,958

$177,097

$572,475

$540,549

Cost of material sold

130,354

123,027

400,195

372,503

Gross profit on sales

54,604

54,070

172,280

168,046

Operating expenses.

47,452

46,631

144,405

140,067

Depreciation and amortization expense

2,178

2,442

7,102

7,307

Interest expense, net

2,669

2,637

7,409

8,371

Income before taxes

2,305

2,360

13,364

12,301

Income Taxes:

Federal.

747

840

4,351

4,193

State

179

166

1,032

865

926

1,006

5,383

5,058

Net income

$1,379

$1,354

$7,981

$7,243

Net income per share

$.10

$.10

$.57

$.52

Diluted income per share.

$.10

$.10

$.57

$.52

Financial Ratios:

Return on sales

 .75%

 .76%

 1.39%

 1.34%

Asset turnover

1.60

1.65

1.66

1.68

Return on assets

 1.20%

 1.26%

 2.31%

 2.25%

Leverage factor

3.25

2.98

3.25

2.98

Return on opening stockholders equity

 3.89%

 3.76%

 7.50%

 6.71%

Other Data:

Cash dividends paid

$2,761

$2,739

$8,245

$8,216

Dividends per share

$0.195

$0.195

$0.585

$0.585

Average number of shares outstanding

14,061

14,048

14,052

14,045

1.

Condensed Financial Statements

2.

Earnings Per Share

In accordance with SFAS No. 128 "Earnings per Share" below is a reconciliation of the basic and diluted earnings per share calculations for the periods reported (dollars and shares in thousands):

For The Three

For The Nine

Months Ended

Months Ended

Sept. 30,

Sept. 30,

2000

1999

2000

1999

Net Income

$1,379

$1,354

$7,981

$7,243

Weighted average common shares outstanding

14,061

14,048

14,052

14,045

Dilutive effect of outstanding employee and

directors' common stock options

-

11

-

9

Diluted common shares outstanding

14,061

14,059

14,052

14,054

Basic earnings per share

$.10

$.10

$.57

$.52

Diluted earnings per share

$.10

$.10

$.57

$.52

Outstanding employee and directors'

common stock options having no

dilutive effect

992

820

992

820

3.

Segments

The Company has reviewed the business activities of its divisions and subsidiaries in accordance with the requirements of SFAS No. 131. The Company has concluded that its business activities fall into one identifiable business segment as approximately 91% of all revenues are derived from the distribution of its specialty metals products. These products are purchased, warehoused, processed and sold using essentially the same systems, facilities, sales force and distribution network.

4.

Item 2.

Management's Discussion and Analysis Of Financial Condition and Results Of Operations.

Results of Operations

Operating results before taxes, depreciation, amortization and interest expense for the third quarter of 2000 were down 3.9% compared to 1999's third quarter. The Company earned $1.4 million ($.10 per share) in both the third quarter 2000 and 1999. Results were negatively impacted by a reduction in gross margins primarily due to the inability to fully recover mill price increases. The increase in operating expenses was mainly driven by inflation in wages, benefits and operating costs, and a 1.6% increase in the physical volume of shipments to customers. Earnings for the first nine months of $8.0 million ($.57 per share) were up 10.2% from last year's $7.2 million ($.52 per share).

Quarterly sales totalled $185.0 million, representing a 4.4% increase from the third quarter of 1999 sales of $177.1 million. Higher shipment levels were the primary reason for the sales dollar change. For the first nine months of 2000 total revenues were $572.5 million as compared to $540.5 million in 1999, a 5.9% increase.

Gross profit for the quarter increased by $.5 million (1.0%) to $54.6 million due mainly to sales volume increases which where offset by a decrease in the total gross margin percentage from 30.5% to 29.5%. The decrease in the margin percentage was caused primarily by the inability to pass mill cost increases on to our customers. For the first nine months of 2000 total gross profit increased 2.5% to $172.3 million while the gross margin percentage decreased from 31.1% to 30.1%.

Third quarter operating expenses were up $.8 million (1.8%) as compared to the third quarter of last year. The increases were mainly due to inflation in wages, benefits and operating costs along with higher volume-related expenses. Year-to-date operating expenses were up by $4.3 million (3.1%) which reflect volume increases and additional costs incurred in the second quarter of 2000 related to the consolidation of two warehouses into the Franklin Park, Illinois location.

Third quarter and year-to-date depreciation and amortization expenses where comparable to last year.

Net interest expense for the third quarter approximates the third quarter of 1999 while year-to-date interest was $1.0 million (11.5%) less then the same period last year. During the third quarter of 2000 long-term debt began increasing to support increased working capital while during the third quarter of 1999 debt was decreasing in line with decreases in working capital.

Liquidity and Capital Resources

New Accounting Standard

Item 1.

Legal Proceedings

There are no material legal proceedings other than ordinary routine litigation incidental to the business of the Registrant.

Item 6

Exhibits and Reports on Form 8-K

(a)

None

(b)

No reports on Form 8-K have been filed during the quarter for which this report is filed.